Chinese Business and Politics: A Growing Influence in Cambodia

Dak Dam commune, Mondolkiri province – Cambodian laborers work the soil in this remote area under the watch of Chinese bosses and guards whom they cannot understand and live in bamboo shacks painted with Chinese characters they don’t comprehend.

The Wuzhishan LS Group pine tree plantation stretches across vast swaths of Mondolkiri’s rolling hills, once the domain of Phnong ethnic minority hilltribes. The Phnong now claim that the Chinese company has colluded with the Cambodian government to illegally force them from their ancestral homeland.

Wuzhishan’s vast land concession bears many of the hallmarks of Chinese foreign investment and development. It is an ambitious project in an underdeveloped area. Workers say it involves hard, rigidly organized toil that provides desperately needed jobs but little more. And the operation is almost completely opaque to outsiders.

“Communist people are always strict like this,” said Khim Phoeun, a 40-year-old laborer from Svay Rieng province, who earns approximately $40 per month to till a daily quota of 300 square meters of the plantation’s land.

“Dislike it or not, I just do the work because there is no better work to do,” he said.

At multiple on-site locations and at the Mondolkiri headquarters in the provincial capital of Sen Monorom, Wuzhishan bosses repeatedly declined to comment.

China was Cambodia’s top foreign investor in 2004, with more than $80 million flowing into the country through private firms. Also keeping pace with Chinese investment has been the flow of senior officials from Beijing: President Jiang Zemin visited in 2000, Premier Zhu Rongji in 2002, Foreign Affairs Minister Li Zhaoxing in 2003, Deputy Prime Minister Wu Yi in 2004, and now Wen Jiabao, Premier of China’s State Council, was scheduled to arrive on Friday for a two-day visit.

Wen Jiabao, who holds a position in China roughly equivalent to Cambodia’s Cabinet Minister Sok An, is the highest-ranking official to visit Cambodia from China’s current administration under President Hu Jintao, who took office in 2003.

Official visits between Cambodia and China usually culminate in the announcement of a major new investment, and Wen Jiabao is already scheduled to attend the ceremonial groundbreaking of a $280 million Chinese-built hydropower plant in Kampot province.

China does not participate in the Consultative Group meeting with other donors to announce its level of aid money, but a foreign diplomat said on condition of anonymity that Chinese governmental aid to Cambodia is probably on par with any of the largest donors, including the EU and Japan.

But observers say that the line between Chinese government aid and private investment is blurred because large corporations generally retain some level of government control, and neither Chinese aid nor investment is held to the standards of transparency required by Western nations or Japan.

A Chinese Embassy official who declined to give his name emphasized a traditional neighborly relationship between the countries.

“Since China and Cambodia are good friends, we think we should do everything for bilateral cooperation and bilateral development,” he said before declining further comment.

While many private investors may be apprehensive about Cambodia’s business climate, Chinese investment is driven by political as well as economic motives, the foreign diplomat said.

“Chinese investors don’t see Cambodia in the same way…. It’s another facet of China’s soft power policy,” he said. “It’s impossible to judge what China’s broad strategic aims are.”

China, observers said, is probably consolidating its power and competing with Japan for regional economic dominance.

Investments in indigenous areas are particularly culturally sensitive, but another concern in Mondolkiri is common to other Chinese investments: Environmental damage.

Estimates of the size of the Wuzhishan concession range from the legal limit of 10,000 hectares upward exponentially. Even government officials acknowledge that the pine plantation is larger than the 10,000-hectare limit, but there is no reliable official measurement.

At O’Reang district Governor Sao Sarim’s approximation of 30,000 hectares, Wuzhishan’s plantation would be slightly larger than the Pacific island of Guam and smaller than the Gaza Strip.

Chinese official news agency Xinhua reported this week that a 63,000-hectare rubber concession is being sought a Chinese firm in Preah Vihear province.

That concession would be almost as large as Singapore and would lie within protected forests. Cambodian officials said the deal has not yet been finalized.

China has also been working on numerous major hydropower developments that could affect Cambodia’s rivers, including some projects in Cambodia and some upstream on the Mekong River in China itself.

Cambodia is struggling to provide its own people and businesses with affordable, reliable electricity, and hydropower is routinely cited by donors and development banks as one major potential energy source, but China has developed a reputation for disregarding river ecology.

“They feel that when the country is poor you cannot emphasize the environment as the number one consideration,” said a vice president of the Taiwan Business Chamber of Cambodia who declined to be named. “If you worry too much about environmental issues, you cannot move.”

Chinese Chamber of Commerce in Cambodia President Jimmy Gao said that while China can do more with less money in a shorter time than other countries, it doesn’t necessarily mean that China is either superior or reckless.

“It’s not a question of Western ways not being practical or Chinese ways being practical,” Jimmy Gao said. “It’s a question of what Cambodia needs now.”

He added that although the scale of Chinese investment is intimidating to Western countries and Japan, the economy is open to anyone, and much of China’s private investment in Cambodia is on a smaller scale, such as textile factories.

“We are suitable to a tough position, because we were so poor 20 years ago,” he said, adding that Chinese ventures succeed and fail, but many other foreign investors are simply scared off by risks. He added that ethnic Chinese Cambodians sometimes provide an economic and cultural bridge for investment.

Mao Thura, undersecretary of state at the Commerce Ministry, said that China’s increasing influence in Cambodia was not unusual.

“In the whole of Asia, China is moving forward,” Mao Thura said. “China’s economy can even make the US afraid.”

He added that among Asean countries, China is closest to Cambodia and Laos.

But while Jimmy Gao said business and politics remain fairly discreet in Cambodia’s free market, some observers disagreed.

“From a Western strategic point of view, it’s not a good thing if China increases its influence over Japan’s, because Japan is a known ally,” said another foreign diplomat who also declined to be named.

Minister of Defense and Deputy Prime Minister Tea Banh said that China has helped construct RCAF military bases, hospitals, schools and military camps.

“It is a relationship forever,” he said, adding that although he could not put a price tag on China’s military aid, it is “quite big.”

The first diplomat said the Cambodian government is becoming beholden to China for the consistent influx of cash.

“The increasingly close relationship makes it difficult for Cambodia to [criticize] certain Chinese policies,” he said, giving the upstream damming of the Mekong as one example.

Hun Sen said last year that the dams posed no problems in Cambodia and verbally attacked experts who warned that the Mekong could become a polluted “dying river” like China’s Yangtze and lose its wildlife.

O’Reang District Governor Sao Sarim said that although he believes Wuzhishan’s plantation to be illegal, the level of political interaction between the national and provincial governments and the Chinese company is out of his reach, so he simply avoids those areas of his district.

“I never went to the sites,” he said. “The province never informs me about it. I don’t want to be involved.”

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